Meta Platforms is a new Top Pick at Mizuho, analysts see upside to consensus

investing.com:

Mizuho Securities analysts named Meta Platforms (NASDAQ:META) stocks their new Top Pick, reiterating a Buy rating and a target price of $575.

“Our deep dive into META's key products indicates upside to consensus FY24 revenue forecast, and meaningful optionality in strategic assets,” analysts said.

“We note that improving monetization in Reels, geographic expansion and Amazon (NASDAQ:AMZN) partnership of Shops, and unified ranking to optimize video placements give us incremental confidence in our above-the-Street revenue growth of 20%,” they added.

META shares rose 1% in premarket trading Monday.

Simultaneously, they expect FB Shops' growth to accelerate due to international expansions and a potential Amazon (AMZN) partnership in 2H24.

This could be a pivotal moment, analysts noted, transforming social media into a major transaction platform, altering user behavior, and redirecting retail media spending towards Meta.

Moreover, they anticipate that the company's long-term investments in WhatsApp, Generative AI for creative content, and the Large Language Model (LLM) Llama could potentially increase revenue per user by 65% over time.

“We assume that over time, WhatsApp could improve its rev/ user from $2/user to that of Meta’s international business at $20/user, lifting revenue yield for the entire company by 30%,” analysts said.

Meanwhile, the company’s GenAI creative tool under Advantage+ “could evolve into automating video creation,” which, in turn, would allow advertisers to “unlock additional 30% of ad spending that typically allocates into video production.”